The Securities and Exchange Board of India (SEBI) has granted a significant extension to existing Angel Funds regarding their compliance with the accredited investor mandate. According to Rediff Money, NDTV Profit, and Mint, the regulatory body has extended the deadline until March 31, 2027 for Angel Funds registered on or before September 10, 2025, to meet the accredited investor requirements. This extension provides existing Angel Funds with additional time to restructure their investor base and ensure compliance with the new regulatory framework, with the decision based on representations from the Alternative Investment Fund (AIF) industry seeking additional time for existing angel funds to meet the mandate. The circular, issued on Monday, September 8, 2026, comes into force with immediate effect.
Under the revised timeline, angel funds registered with SEBI on or before September 10, 2025, will have to implement the accredited investor mandate by March 31, 2027. As reported by Rediff Money, NDTV Profit, and Mint, during the extended transition period, these funds can continue to offer investment opportunities to non-accredited investors until March 31, 2027, subject to a limit of 200 such investors. Additionally, such angel funds will not be allowed to accept contributions from non-accredited investors for investment in an investee company after April 1, 2027. Existing investors in these angel funds will continue to hold their investments already made in the funds in accordance with the terms of the private placement memorandum (PPM) and/or other fund documents. Angel funds registered after September 10, 2025, are already required to onboard and offer investment opportunities only to accredited investors, so this rule does not apply to them.
The extension provides relief to existing Angel Funds that were facing compliance deadlines, with the revised deadline replacing the earlier timeline of September 8, 2026. According to Rediff Money, NDTV Profit, and Mint, for angel funds granted registration after September 10, 2025, the existing requirement remains unchanged - such funds are required to onboard and offer investment opportunities only to Accredited Investors. The latest circular comes into force with immediate effect, demonstrating SEBI's approach to balance regulatory compliance with operational realities in the Angel Fund sector while maintaining the integrity of the accredited investor framework. The accredited-investor framework is aimed at ensuring that investors participating in such higher-risk investment opportunities have the required financial sophistication and capacity.
Angel funds are money pools created by high net-worth individuals or companies for investing in start-ups and early-stage companies, where the risk of losing money can be high. As reported by Mint, the minimum investment amount has been reduced to ₹25 lakh from the earlier ₹50 lakh, while the maximum investment limit has been increased to ₹5 crore. The investment limits for investee companies have also been revised significantly - the minimum investment has been lowered to ₹10 lakh from ₹25 lakh, while the maximum investment limit has been increased to ₹25 crore per investee company. Additionally, the lock-in period for each investment by an angel fund has been reduced to six months in case of exit through third-party sale, though it remains one year for company buy-backs or sales to promoters.
